Why the GrainCorp (ASX:GNC) share price is on watch today

The GrainCorp Ltd (ASX: GNC) share price will be on watch after the company provided a business update. Here's what the company announced.

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The GrainCorp Ltd (ASX: GNC) share price will be on watch this morning. This comes after the company provided a positive business update to investors. At yesterday's market close, the grain exporter's shares finished the day at $4.71.

Agricultural ASX share price on watch represented by farmer in field looking at tablet computer.

Image source: Getty Images

What did GrainCorp announce?

It will be interesting to see where the GrainCorp share price moves today following this morning's latest release.

GrainCorp advised that it's forecasting a $25 million boost in annualised earnings before interest, tax, depreciation and amortization (EBITDA) by 2023-24.

It stated that new operating initiatives have resulted in the business becoming more sustainable. These include expanding bulk materials for export, increasing utilisation at the Numurkah and West Footscray processing facilities, and a shift in the foods product mix to higher-value products.

In further news that could impact the GrainCorp share price, the company has revised its international operating model with the closure of its Hamburg (Germany) office. Planning and supply chain performance efficiencies are also expected to be implemented in the near future.

As a result of the company's strategic changes, EBITDA is forecast to come in at $240 million by 2023-24.

Management commentary

GrainCorp managing director and CEO Robert Spurway touched on the company's plans, saying:

Our priority is to increase our return on invested capital by strengthening our core businesses.

We will achieve this by utilising excess port capacity with commodities such as woodchips, fertiliser and cement. We are also continuing to drive operational efficiencies throughout our network, which will enhance our competitiveness and improve our customer offering.

Mr Spurway added:

We have taken numerous steps to reduce variability in our earnings, including network rationalisation, operational improvements, and the establishment of the Crop Production Contract. These have helped to stabilise our earnings profile and provides us with confidence to communicate a through-the-cycle view on future earnings.

GrainCorp share price summary

Over the past 12 months, the GrainCorp share price has increased by more than 50%. The company's shares are also up 12% year to date and within a whisker of reaching their 52-week high of $4.94.

Based on the current share price, GrainCorp has a market capitalisation of around $1.07 billion, with 288 million shares outstanding.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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